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Moldova’s Economy and IMF Program Tokhir Mirzoev, IMF Resident Representative July 2011

Moldova’s Economy and IMF Program Tokhir Mirzoev, IMF Resident Representative July 2011. Outline. Economic background Outlook IMF program. The Real Sector Continued to Grow…. Recent indicators point to revival of activity since Q4 2009. In Q1 GDP grew 8.4% relative to 2010Q1.

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Moldova’s Economy and IMF Program Tokhir Mirzoev, IMF Resident Representative July 2011

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  1. Moldova’s Economy and IMF Program Tokhir Mirzoev, IMF Resident Representative July 2011

  2. Outline • Economic background • Outlook • IMF program

  3. The Real Sector Continued to Grow… Recent indicators point to revival of activity since Q4 2009. In Q1 GDP grew 8.4% relative to 2010Q1. (twelve-month growth rates, percent)

  4. These trends are supported by recovering remittances and are helping the budget. (year-on-year growth rates, percent)

  5. Financial Sector Has Resumed Growth Credit growth has turned positive and banks’ NPL ratios are declining.

  6. Outlook • Growth looks to exceed expectations • Inflation is in line with forecast, but seasonal effects uncertain • Fiscalperformance is good but needs strengthening • Current account deficit could widen temporarily • But significant downside risks still remain, especially due to external factors

  7. IMF-supported Program • 3rd program review completed on July 13, 2011 • Enabled disbursement of SDR 50 mln (USD 79 mln) • Total disbursements amounted to SDR 220 (of SDR 396 million) • Budget support assistance has ended. Remaining disbursements will go to replenish NBM reserves • Planned missions: September (staff visit) and November (program review) • Performance continues to be strong although some challenges emerge

  8. Looking ahead: key policy issues • Staying on course with fiscal strategy • Tax policy reform • Medium-term budget framework • Fiscal responsibility framework • Budget 2012 • Tax administration reform • Gradual shift of monetary policy focus on containing inflation risks • Structural reforms: • Education • Energy sector • Financial sector • Privatization

  9. Thank You!

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